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Old 02-20-2005, 10:15 PM   #1 (permalink)
alicat
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Location: West Michigan
Unbelievable taxes on Web smoke purchases in Michigan

Sorry that this is going to be long. I realize smoking sucks. It's bad for me and that's about it, because I don't smoke indoors so as not to expose others to my habit. That said, it's proven scientifically that nicotine is addictive. I and my hubby are very addicted. We have tried many routes to quit that did not work (I'm sure all of you are familar with the most common ones, the patch, gum, blah blah). We both want to quit in the immediate future for both of our health. Being two loving people in a great relationship for many years, only the lack of nicotine has threatened our harmony the times we've simultainiously tried to quit smoking.

About 3 1/2 yrs. ago, hubby was permanently laid off from his best paying job to that date (somewhere between upper lower-class and lower-middle-class). At that point in time we tried to quit smoking and it didn't work. Michigan has got one of the most outrageous tabacco taxes in the country. We (as smokers) watched year after year the taxes jump .50 cents at a time on a pack (due in no small part to our senator Granholm). Hubby and I tried and couldn't quit. Living off of unemployment and trying to keep a roof over your head, meaning stress, can make that hard to do. If you've never been addicted to cigarettes (or are one of the lucky ones who can quit on a dime) then you won't understand our situation.

Someone told us that there were companies that sold cheap as smokes on-line as well as name brands. So we searched and found an internet site (in Kentucky) that had imported cigarettes for around $10 a carton. We were used to smoking Marlboro's but figured in our situation we couldn't be picky, so we ordered the cheap smokes. This site said that, legally, they couldn't ship cigarettes to 2 states (not ours), and asked customers to petition the government for them to be able to. We bought from that site for nearly 3 1/2 yrs..

A couple of weeks ago, I logged onto their site to order and lo-and-behold, Michigan had been added to their (current) list of about 8 states they now can't ship to. So I did a Google search and clicked on one of the first few hits and orderd the same brand we smoke from them (they're in N.Y., one of the first states the other site couldn't ship to). Their site didn't say squat about being prohibited from shipping to any states. We assumed that these sites are legit (they're right there for anyone to immediately find) and everything was above-board.

Now suddenly this:

(Allegan County, February 15, 2005, 6:41 p.m.) When the cigarette tax went up last year, the state expected more smokers to seek out "tax-free" cigarettes. But as 24 Hour News 8 found out, the authorities still want their money, even if you buy the cigarettes on the Internet.
This past weekend, Ronald Krywosinski received a bill from the state saying he owes money on tax-free cigarettes he bought on the Internet. "I didn't even know they had a law past. I didn't see it on TV. I never got a letter from nobody...this is just…bam," he said.

And it's not just the unpaid taxes the state wants, but interest on that money as well.

The total bill for 168 cartons over a three-year period comes to $2,344.14 and is due in 30 days.

"They go to the Internet and get tobacco sales. Tomorrow, it could be e-bay," says Krywosinski.

Maybe not that soon. Unlike any other product that can be sold across state lines, the states have enforcement leverage when it comes to tobacco. It is a federal law called the Jenkins Act.

Basically, it requires the seller of tobacco, in this case a company called eSmokes.com, to take all those customers who bought tax-free cigarettes and turn them into authorities. That is probably how Krywosinski got caught. But he says he was duped. "The Web site always put up a letter up that they were fighting that, but it had not been passed."

Unlucky for him, that Web site makes the Jenkins Act very clear.

But, even if the seller didn't make it clear, the state treasury department says the buyer is still responsible.

Krywosinski is so mad he wants to move his trucking business out of Michigan to a place where registrations are cheaper.

Even more dramatic, he's thinking about not paying the tax at all.

"I'm thinking about taking my prison time," he said.

At the very least, he says he will try to kick his habit.

Last year, Michigan collected nearly $993 million in cigarette taxes. It is not clear what percentage of that money was collected under the Jenkins Act.

As for out-of-state purchases on other items, you're supposed to pay sales tax. But, that's based upon the honor system.

Right now, the only way the state could find out about those purchases is through an individual audit.


My hubby and I live paycheck to paycheck, that's the reason we started buying crappy smokes made in Peru in the first place. If the state socked us with a $2000.00 bill (that's conservative, we bought smokes for 6 mths. longer and for two people), we might literally have to file bankrupcy as we don't even have a dime in savings. I have a personal stake in this, but still, a few things seem wrong besides: 1) The online retailers are supposed to report their customers to the government (making them the first one's responsible and nipping the problem (and taxes) in the bud). 2) Taxes on any other item bought online are on the honor system (hello, witch hunt anybody?!). 3) $993 Million Did I just say "witch hunt"? I knew the taxes were high but, holy christ, I can't even fathom a state raking that much in from one "segment" of the population. Imagine if liquor taxes were on a par with that in any state, revolution!

I had no clue that these sites were illegal (if indeed they are), we would have checked ourselves into a program, if they exist, rather than break the law by buying from them. I don't know if we'll be hunted down and fined but I am royally pissed off.

Yes, I know, and agree, smoking is a nasty habit. I appreciate any response that isin't of the "tsk tsk, why do you smoke?" variety. Your thoughts please.

Ali
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